Germany’s lower house approved a $122 billion rescue package for Spanish banks in a bid to help the country cope with "excessive" market fears and prevent the eurozone's debt crisis from spreading further.

Lawmakers voted 473-97 to support the bailout of the country's financial industry, with 13 abstentions.

The vote was widely anticipated, as lawmakers were called back from summer vacations to vote on the measure in a special session. Even so, 37 of them did not turn up to vote.

German Finance Minister Wolfgang Schaeuble had called earlier for lawmakers to approve the package, saying it would help Spain cope with "exaggerated nervousness" in financial markets and contribute to financial stability across the eurozone.

The details of the package are to be agreed upon Friday during a conference call of eurozone finance ministers.

After that, Spain and the finance ministers are expected to officially sign a “memorandum of understanding” – the formal agreement to terms and conditions of the bailout.

Spain hopes to receive the first portion of the 30 billion euro ($37 billion), which will allow the country to refinance its banks, by the end of July. In return for the financial help, Spain agreed to a raft of banking reforms and EU inspections to ensure the restructuring process is effective.

Madrid has yet to specify how much of the total it intends to take.

Earlier, independent auditors said Spain's banks would need about 62 billion euro in the worst-case scenario.

The EU financial authorities say Spanish banks could be directly recapitalized from the eurozone rescue fund without state guarantee, as a single European banking supervisor would be set up next year.

EU ministers extended a deadline for Spain to cut its public deficit to the bloc's 3% limit by 2014 in exchange for further budget savings. Earlier, the European Commission proposed easing Madrid's deficit target for this year to 6.3% of economic output, 4.5% for 2013 and 2.8% for 2014. Spain originally meant to cut its budget shortfall to 4.4% this year, but later revised that to 5.3%.

Spanish banks faced the fastest-yet rate of capital flight last month since the launch of the single currency in 1999. Residents’ deposits fell 2.5 per cent in April from March, while non-residents withdrew 24.6 billion euro of stock and bond investments in April, compared to 4.54 billion euro in all of 2011.

Any amount not used for bank recapitalization out of the up to 100 billion euros could be used to buy public debt, Spanish daily El Pais reports.